Chancellor Jeremy Hunt has tempered expectations of tax cuts in Wednesday’s budget, announcing instead an £800 million package of technology reforms aimed at streamlining processes for frontline public sector workers.
Under the Treasury’s initiative, drones will be deployed by the police to assess incidents such as traffic collisions, while artificial intelligence will be harnessed to reduce MRI scan times by a third.
The Treasury estimates that these reforms could yield benefits worth £1.8 billion in increased public sector productivity by 2029.
In a statement, the chancellor emphasized the importance of efficiency over increased spending, stating, “We shouldn’t fall into the trap of thinking more spending buys us better public services. There is too much waste in the system, and we want public servants to focus on what matters most: educating our children, ensuring our safety, and providing healthcare when needed.”
However, Darren Jones, Labour’s shadow chief secretary to the Treasury, criticized the announcement, dismissing it as “spin without substance.”
Meanwhile, Hunt disclosed to The Sunday Telegraph that he is cautious about taking risks, particularly in light of previous speculation regarding income tax cuts.
The chancellor is expected to meet with Prime Minister Rishi Sunak on Sunday evening to finalize decisions on potential tax cuts. The possibility of a 2p income tax reduction is under consideration, although Hunt stressed that reducing the tax burden is a long-term endeavor, acknowledging that recent financial forecasts have posed challenges.
According to reports, the Office for Budget Responsibility recently informed the chancellor that he has approximately £12.8 billion of fiscal headroom, a figure slightly lower than previously estimated.
Hunt faces pressure to deliver tax cuts, particularly as this budget could be the last major economic announcement before the next general election.
Potential measures being considered include changes to the tax treatment of holiday lets to generate £300 million and the introduction of a levy on vaping products to raise an additional £500 million. Additionally, the abolition of non-domiciled status is being contemplated as a means of boosting revenue.
Non-domiciled status allows foreign nationals residing in the UK, but officially domiciled overseas, to avoid UK tax on their overseas income or capital gains. The potential abolition of this status has implications, particularly considering that Mr. Sunak’s wife, Akshata Murty, has previously enjoyed non-dom status.
